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Many EU IT tenders break procurement laws

Government agencies are "consistently breaking competition laws" when procuring IT products from the private sector by specifying required brands and trademarks which has removed competition from the tendering process, according to Openforum Europe's recently published Procurement Report 2010. The report found that of the tender notices studied, 13 per cent made reference to trademarks or brands.

An example of this behaviour occurred in Switzerland in 2009: open source vendors took legal action against the requirement of a local government authority for Microsoft products. Although the vendors had some initial success, the open source vendors eventually lost their case.

Even though the percentage of trademark specifying tenders is lower than that determined in the two previous years (25 per cent in 2008, 22 per cent in 2009), the report claims that the figure of 13 per cent is still significant as it "is merely the 'tip of the iceberg'." This comment is explained in the report by noting that some countries were omitted from the analysis, only tenders above the EU minimum threshold were considered, only specific mention of trademarks was considered and the timescale was limited to a three month snapshot.

The report urges greater scrutiny by the EU of the whole procurement process, noting that recent legislation goes beyond the award of damages to an aggrieved vendor once procurement rules have been breached: "Now, the courts will be empowered to declare the contract ineffective for any Public Sector and Utility contracts awarded in breach of EU public procurement rules. CAs or utilities that have acted in breach of those rules will also be liable to financial penalties."

The report notes that public procurement accounts for a major portion of EU economic activity, over € 2,200 billion or around 19.4 per cent of the EU's GDP in 2009. Openforum Europe is a not-for-profit industry organization whose mission is "to encourage an 'open competitive choice for IT users' by actively supporting the employment of Open Standards, wider use of Open Source, adoption of Open Software business models".